The Australian Council of Trade Unions welcomed recommendations in the Reserve Bank review that sought to renew focus on achieving full employment, adding that the appointment of labour force expert Iain Ross means the Board is heading in the right direction.
The Australian Council of Trade Unions has welcomed the renewed focus on achieving full employment raised in the recommendations for reforming the Reserve Bank.
The body also supported the announcement that former Fair Work Commission president, and labour force expert, Iain Ross is due to be appointed to the RBA's Board.
ACTU Secretary Sally McManus said she hoped the review would see the bank do more to support working people, as she accused the RBA of misjudging the cause of inflation.
With this review of the RBA and the inclusion of fresh expertise on its board, we look forward to economic levers being used to support working people and make Australia’s economy and workforce stronger and more equitable, she said.
Sally McManus, Secretary of the Australian Council of Trade Unions, has welcomed a renewed focus on employment in the recommendations from the review into the Reserve Bank. Picture: Martin Ollman/Getty Images
It's time for the RBA to rebalance its efforts towards achieving its objective of full employment, and away from imposing higher and higher interest rates on mortgage holders.
It is imperative the RBA better understand and tackle the underlying causes of inflation – which is not wage growth but corporate profiteering.
The ACTU has long been critical of the RBA, arguing the central bank lacks understanding of the drivers of wages growth and claiming it takes too narrow a view on monetary policy.
Speaking to Sky News Australia, Ms McManus said even though the objective of full employment is part of its (the RBA's) charter, we don't believe they have been putting the same focus on that as they have been on interest rates.
It's meant in a way that their assumptions around what is full employment have proven actually not to be correct.
She added that a key concern held by the ACTU was around the lack of diverse opinions on the RBA Board, saying the worry expressed by the bank over a wage-price spiral was an obvious sign they lacked knowledge of the labour market.
Clearly one of the things that was missing was an updated understanding about how the labour market works, she said.
That's been shown by, the most obvious one, this concern about a wage-price spiral which never eventuated, because it never was going to eventuate, it can't in the way the Reserve Bank feared or threatened.
That is because they don't really actually understand how wages work.
Over a period of time they've made predictions around what would happen with wages and every single one of those predictions has been wrong.
Ms McManus renewed criticism of the RBA, telling Sky News Australia they don't really actually understand how wages work and needed an updated understanding of the labour market. Picture: Lisa Maree Williams/Getty Images
In a statement responding to the announced reforms, the body said it was supportive of greater policy collaboration between the RBA and Treasury as well as the requirement for more transparency over its decision making process.
The review also recommends closer collaboration between Treasury and the RBA on fiscal and monetary policy, and the ACTU supports this, the statement said.
Fiscal policy can target the underlying causes of inflation far more efficiently and fairly than the blunt instrument of interest rate rises.
The review also comes with a requirement for the RBA to explain its decisions to the public, reflecting greater transparency and accountability around decisions that have a big impact on workers.
In his announcement of the review's recommendations, Treasurer Jim Chalmers said he had decided to appoint Mr Ross in order to address a perceived lack of expertise on the current board, adding he would bring a deep understanding of labour markets and economics to the role.
When it comes to making sure that there are diverse range of views on the Board, I think that there is a role for somebody who understands and is an expert in the labour market, he said.
I think workers do deserve a voice around the Reserve Bank table and I think Mr Ross is satisfying an important objective which is to make sure that the wages and living standards of ordinary workers are considered and contemplated as a Reserve Bank takes the decisions.
Federal Treasurer Jim Chalmers said he was appointing Iain Ross to provide a voice for Australian workers on the RBA Board, a move welcomed by the ACTU. Picture: Dan Peled/NCA Newswire
While the ACTU was quick to jump on Mr Ross' considerable labour market expertise he is not a direct union appointment, as some had been calling for while the review was underway.
Direct union representation on the Board was always highly unlikely, as it would have been immediately rejected by the opposition who's support the government will need to pass legislative reforms based on the review's recommendations.
Nonetheless, the emphasis placed upon workers views by Treasurer Chalmers could still prove a sticking point once the Liberal Party fully unpacks the review and debate over the reforms begins in earnest.
For the time being, however, bipartisan support for the review seems to be in tact.
In a press conference on Thursday afternoon, shadow Treasurer Angus Taylor expressed satisfaction with the recommended changes to the RBA, saying he felt they were a good stab in the right direction.
On the appointment of Mr Ross and the heavy emphasis placed on workers voices he said that any appointments should follow the recommendations laid out in the review.
We want the right people around the table, he said.
It should be merit-based and that is important. We need the very best people to make tough monetary policy decisions around the table.
https://www.skynews.com.au/australia-news/politics/actu-welcomes-rba-review-and-renewed-focus-on-achieving-full-employment-as-steps-in-the-right-direction/news-story/370f3cc08e7001616d38a15cbfa583f8
